Kenya + 5 more

Horn of Africa Bulletin, Volume 28, No. 4 - July-August 2016: The political economy of extractives in the borderlands

Attachments

Contents

  1. Editor's Note
  2. Extractives in the Horn of Africa: Regional potential and challenges
  3. Oil in Somalia: Renewed interest in Somali oil
  4. Avoiding the local resource curse in Turkana, Kenya
  5. "Development by dispossession?" A reappraisal of the Adola Gold Mine in southern Ethiopia

EDITOR'S NOTE

The political economy of extractives in the borderlands

The extractive sector, mainly consisting of oil, gas and minerals, has great potential to contribute to economic growth. Experiences in countries such as Norway, Canada and Botswana suggest that extractives can indeed be effectively managed to contribute to sustainable economic growth. As such, extractives could be an asset if the necessary regulatory frameworks and policies are in place, coupled with visionary and accountable leadership. The huge potential benefits notwithstanding, extractives are also associated with a host of problems, including environmental degradation, conflicts, poverty, health problems, corruption as well as adverse impact on biodiversity, ecosystems and local communities. The experiences of Nigeria, DR Congo and Central African Republic testify to the potential for conflict in extractives. Informed public policy is essential to ensuring that the potential societal benefits outweigh the negative impacts associated with this sector. Across Africa, case studies abound in which extraction of minerals has left devastated landscapes and disillusioned communities. It is indeed a challenge to ensure that extraction of resources positively contributes to national economies while at the same time also respecting the needs of ecosystems, biodiversity and benefits to local communities.

The Horn of Africa region has not been known for extractives. In recent years, however, the region has shown a mineral boom. With a significant discovery of gold, copper and silver Eritrea is moving towards a mining boom and is on the verge of becoming a new entrant on the international mining map, whereas Kenya and Uganda recently struck oil. Ethiopia on the other hand has operational gold mines and a potential for the discovery of oil and huge natural gas as well as salt and potash. Oil and gas explorations in Somalia and Somaliland have also shown positive results. With the right institutions and policies put in place this mineral bonanza could well be an asset that helps sustain the rapid economic growth the region has registered in recent years. Apart from the usual suspects of governance problems the extractive sector in the HoA faces some unique challenges, though.

One peculiarity of the extractives in the HoA is that nearly all of the new strategic minerals are found in the peripheral, border areas of the region where political marginalization is compounded by multi- layered conflicts and economic deprivation of local communities.

National governments have put a high premium on these strategic resources exerting greater control over the territories and the people living in these areas. These are areas, which are the poorest, historically marginalized where literacy rates are among the lowest and poverty rates the highest. This obviously feeds into grievances. In addition, most of these areas are already prone to communal conflicts. As such, extractives may exacerbate local conflicts. Will the HoA avoid the ‘resource-curse’ path?

In this HAB issue on extractives we have five contributions. Muhumuza Didas provides us with an overview of the extractive sector in general and in the HoA in particular. Among others, he discusses government legitimacy as a critical factor for the success of the extractive industry; the need for communal literacy on the nature of the extractives to manage expectations; engagement deficit (local governments capacity gaps to manage the sector) and the need for a more responsible investment from the revenue accrued from the extractives avoiding the temptation of mega and impressionistic projects. Muhuza also reminds us of the danger of over reliance on the extractive (inherently finite and vulnerable to global market forces) at the expense of other sectors of the economy.

The second contribution by Skovsted and Bamberger takes us to Somalia where oil exploration is exacerbating and complicating already existing conflicts and highlights possible mitigating policy responses. According to them the overarching issue related to oil exploration in Somalia is the question of ownership which is a contentious issue between the Somali Federal Government, the different regional administrations as well as clans and sub-clans in whose lands oil exploration is taking place. A way forward, according to Skovsted and Bamberger, is to temporarily suspend the exploration activities and focus on creating solid political solutions to the territorial, clan-related disputes and find legal solutions concerning ownership and distribution of natural resources. The authors argue that the current decline in oil prices is a blessing in disguise for Somalia, creating potential breathing space that would allow the settlement of legal disagreements and strike a political settlement a priori the discovery of oil.
Negotiation and settlement will be harder, if not impossible, once oil is discovered.

The third contribution by Kennedy Mkutu examines the political economy of oil exploration and discovery in the Turkana county of Kenya with a focus on impacts on local communities. Above all, there is a threat of dispossession of land of the Turkana pastoralists. The author also pinpoints a host of issues such as, loss of access to water sources, potentially adverse environmental consequences and the perceived negligible socio-economic benefits accruing to local communities, all of which have led or can lead to conflicts between communities and the oil companies. More ominously oil has already fuelled inter-ethnic conflict between the Turkana and their neighbors. The author strongly recommends the need to put in place the required regulatory framework by the Kenyan government; one that assures fair distribution of benefits while mitigating the adverse impact of the extractive sector for Kenya to realize its national vision of attaining the middle-income country status by 2030.

The fourth contribution deals with the institutional framework and impact of the extractives on local communities in the Ethiopian context. The contribution by Asebe Regassa looks at extractives and the private sector through a case study of the Adola gold mining and how, despite its high profitability, it has adversely impacted on the livelihood of local communities expressed in the form of continioous land dispossession. Coupled with absence of a trickledown effect this has generated local resentment, which has occasionally resulted in protests and their violent suppression.

Dr. Dereje Feyissa is the guest editor of this issue. In early 2016, the Editorial Committee of the Horn of Africa Bulletin made the decision to adopt the guest editor format especially in relation to thematic issues with a view to expanding the author base and readership of the HAB. Dr.
Dereje due to his extensive research and publications on the borderlands is particularly wellsuited to the role.

Dr. Dereje Feyissa & Demessie Fantaye

Editors